Trust Estate

BOOK REVIEW: Freedom From Wealth By Charles Lowenhaupt

Tom Burroughes, Group Editor, London, 2 November 2018

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The founder of a wealth advisory business has written a book explaining how those who bestow and inherit wealth can benefit lives.

An earlier version of this review was published in Family Wealth Report; we hope readers in other regions will also find this material of value, given that inheritance questions have much in common. In certain parts of the world, such as in mainland China, where the one-child policy has only recently been relaxed, inheritance creates particular challenges.

History books and glossy magazines are full of stories of how scions of great business and political dynasties have come unstuck. The problems take many forms, such as reckless spending, substance abuse or wrecking physical and mental health. While parts of the public might gloat, even imagining that there is some cosmic “justice” in how money does not necessarily buy happiness, there is a clearly serious question here. And above all, it should be recognized that inheriting great wealth is not something for which anyone should be “punished” if that wealth has been legitimately acquired. What is the point of believing in honest property rights if you cannot bequeath them to your loved ones and the causes you hold dear?

Even so, there is obviously a challenge in front of those who want to pass on their wealth: How can this be done without causing a number of problems down the line? How to keep an inheritor’s feet on the ground and ensure they forge their own values and create their own goods in the world? And how should inheritors think about this, to avoid traps, whether they be threats (kidnapping, to take an extreme case) through to attracting false “friends” who are only interested because he or she happens to be rich?

A wealth management industry figure who has been thinking about all this is Charles A Lowenhaupt, founder and CEO of Lowenhaupt Global Advisors, based in the US. He has penned The Wise Inheritor’s Guide To Freedom From Wealth – Making Family Wealth Work For You. The 152-page book has an engagingly non-technical style, written in a way that simplifies dealing with inheritance, philanthropy, family communication, fairness, parental expectations and the mechanics of wealth transfer. (The author of this review read it in a few hours.) It does so without dumbing down the subject or becoming at all condescending. Charles enlivens the book with real-life studies (the names are removed to protect client privacy), and these really jump out of the page. There is one example of a family where the patriarch, his wife and children lived in humble circumstances without any obvious trappings of great wealth, and one day the children were told how they stood to inherit a fortune. How Lowenhaupt relates how they adjusted to this and beat early mistakes is one of the highlights of the book. (The book has echoes of Philip Marcovici’s The Destructive Power of Family Wealth.)

Another pleasing aspect of the book is Lowenhaupt’s unashamed individualism. He exhorts families to never lose sight of how each person is unique, not just a cipher of a patriarch or matriarch’s will. To some extent, he says, the use of the word “family” in all discussions can obscure as much as it illuminates. (This is refreshing in an age of creeping identity politics and tribal thinking about many subjects.)

The author is not afraid to confront difficult social issues such as how inheritors – or indeed non-inheritors – think they have been wronged. There are some excellent passages on how to manage families’ expectations, as well as the effectiveness and flexibility of trusts for passing on assets and managing finances tax-effectively.

Lowenhaupt goes to great lengths to explain that wealth, when seen in its proper context, is can be a force for good, but when not understood and managed carefully, can be a prison. At a time when some people continue to live in poverty, that might seem a difficult point to make, but Lowenhaupt does so effectively without ever sounding trite.

The march of time respects no-one, and preserving wealth across generations remains a hard thing to do – despite the claims of academics such as France’s Thomas Piketty, who has claimed that wealth-holders’ assets outstrip the general growth rate of the economy as a whole. “From shirtsleeves to shirtsleeves in three generations” remains all too valid. What can, hopefully, be easier to protect across the decades, however, are the values that can and should matter to all generations. Lowenhaupt’s book is a very effective explanation of how that can be done.

Freedom From Wealth is published by Praeger. ISBN: 976-1-4406-6552-7

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